Update:
(12:00) Growth warning knocks FTSE
FTSE 100 has swung into the red, giving away gains made at the open after the Organization for Economic Co-operation and Development (OECD) warned global growth could halve this year due to the coronavirus outbreak.
After rallying 2.8% at the open on hopes of stimulus from central banks to combat the economic impact of the outbreak, the UK blue-chip index changed course after the OECD warned global growth could fall to just 1.5% this year should the coronavirus spread widely across the Asia Pacific region, Europe and North America.
The FTSE 100 swung into losses, falling 53 points, or 0.8%, to 6,626. The OECD lowered its central growth forecast from 2.9% to 2.4%.
(8:07) FTSE rebounds on stimulus hopes
The FTSE 100 has recovered some ground from its worst week since the financial crisis on hopes of stimulus from central banks amid the coronavirus outbreak.
The UK blue-chip index rose 168 points, or 2.6%, to 6,749, clawing back some ground from last week’s heavy sell-off which wiped 11.1% off UK stocks.
Mid-cap stocks on the FTSE 250 jumped 2.4% and European stock markets also rose. The German DAX 30 was up 1.4% and the French CAC 40 rallied 1.8%.
Investors were buoyed by the Bank of Japan, which followed the US Federal Reserve in vowing to fight the economic impact of the coronavirus.
Governor Haruhiko Kuroda issued an emergency statement saying the bank would ‘strive to stabilise markets and offer sufficient liquidity via market operations and asset purchases’.
That followed Fed chair Jerome Powell’s pledge on Friday that the US central bank would ‘act as appropriate to support the economy’ as ‘the coronavirus poses evolving risks to economic activity’.
Kuroda’s statement sparked a swing into gains for Japan’s Nikkei 225 index and Hong Kong’s Hang Seng, which had opened lower after Chinese factory data showed activity had plunged to an all-time low amid the coronavirus outbreak.
China’s Shanghai Composite index closed 3.2% higher while the Nikkei was up 1% and the Hang Seng rose 0.7%.
China reported at the weekend its manufacturing purchasing managers’ index had fallen to 35.7 in February, down from 50 in January and the worst reading of all time, lower than the 38.8 it reached in the midst of the financial crisis. Any reading below 50 indicates contraction.
‘The shocking reports hammer home the view the global economy could undergo a sizeable economic cooling,’ said David Madden, market analyst at CMC Markets UK.
‘China is the workshop of the world so when they undergo a huge shock, the ripple out effect will be big.’
On the FTSE 100, the rally was broad-based, with only a handful of stocks failing to register gains, including British Airways owner International Airlines Group (IAG), which fell 4.2% to 452.1p.
The UK’s biggest investment trust, Scottish Mortgage (SMT), was among the top risers, up 5% at 589p.
Mining companies jumped as metal prices rallied from lows. Risers included:
- Antofagsata (ANTO) +5.2% at 790.5p;
- Rio Tinto (RIO) +4.1% at £27.79;
- Evraz (EVR) +3.4% at 337.3p;
- Anglo American (AAL) +3.9% at £18.62.
Energy stocks made gains as the oil price rallied, with the price of a barrel of Brent crude jumping 4.3% to $51.80 a barrel. Shell (RDSB) rose 4.1% to £17.32 and BP (BP) was up 3.7% at 410.7p.
